— Licensed · Free Assessment · Same-Day Advice
The Business Survives.
The Debt Does Not.
A pre-pack administration is one of the most effective tools available to a company director facing insurmountable debt. It allows the viable parts of a business — its trading operation, its customers, its staff, its contracts — to be transferred to a new company, free of the old company's liabilities, while the insolvent entity is formally wound down.
The business continues trading without a single day of interruption. Customers see no disruption. Staff keep their jobs. Suppliers continue to be paid. Only the debt — HMRC arrears, trade creditors, bank debt — stays behind in the old company.
Done correctly, a pre-pack is a legally structured, regulated process. Done incorrectly, it can expose directors to serious legal and reputational risk. Business Guardian's licensed practitioners have completed numerous pre-pack administrations and manage every case in full compliance with regulatory requirements.
UK
licensed practitioners
Same
day response
Free
Initial Consultation
Get Immediate Advice
Speak with licensed insolvency practitioners today. Confidential & free.
Director's Helpline
Licensed Insolvency practitioners
Free, confidential consultation
3,500+ Directors Helped
independent expert advisory
— Pre-pack administration
How a Pre-Pack Administration Works.
A pre-pack administration follows a specific sequence, all of which occurs before the administrator is formally appointed:
The company director approaches our team of licensed Insolvency practitioners for advice.
The IP assesses the company's financial position and confirms that administration is the appropriate procedure.
A buyer is identified — this may be an existing management team, a third party, or the directors themselves.
The IP values the company's assets independently to ensure the sale price reflects market value.
The sale is agreed and a sale and purchase agreement is drafted.
The administrator is appointed — by the directors using the out-of-court route, or by the court.
The sale completes immediately on appointment. The business transfers to the new entity. The old company enters administration.
The administrator winds down the old company, dealing with creditors in the statutory priority order.
The entire pre-appointment phase can be managed confidentially. From the outside, the business appears to continue normally — because it does. The change in ownership and the insolvency of the old entity are disclosed to creditors after the event, in accordance with SIP 16 requirements.
— SIP 16
SIP 16 —
The Regulatory Framework.
Pre-pack administrations are governed by Statement of Insolvency Practice 16 (SIP 16), which sets out the disclosure obligations of the insolvency practitioners. Under SIP 16, the administrator must produce a detailed statement for creditors explaining:
01
How the business was marketed before the sale
02
How the asset valuation was conducted
03
Why a pre-pack was considered the best outcome for creditors
04
The identity of the buyer and their connection to the previous directors
05
The consideration paid for the assets and how it was determined
— Pre-pack
Who Can Buy the Business
in a Pre-Pack?
The buyer in a pre-pack can be any party who is prepared to pay market value for the business and assets. Common scenarios include:
Management Buyout (MBO)
The existing directors or senior managers form a new company and buy the business from the administrator. This is the most common pre-pack structure for SMEs. The directors retain operational control, staff are TUPE transferred, and the customer base is preserved. The new company starts free of the old entity's debt.
Third-Party Buyer
The existing directors or senior managers form a new company and buy the business from the administrator. This is the most common pre-pack structure for SMEs. The directors retain operational control, staff are TUPE transferred, and the customer base is preserved. The new company starts free of the old entity's debt.
Partial Asset Sale
The existing directors or senior managers form a new company and buy the business from the administrator. This is the most common pre-pack structure for SMEs. The directors retain operational control, staff are TUPE transferred, and the customer base is preserved. The new company starts free of the old entity's debt.
— Common Question
Frequently Asked
Questions
Is a pre-pack administration legal?
Yes. Pre-pack administration is a fully legal and regulated insolvency procedure in the United Kingdom. It is governed by the Insolvency Act 1986, the Insolvency (England and Wales) Rules 2016, and Statement of Insolvency Practice 16. When conducted correctly — with proper asset valuation, appropriate marketing, and full creditor disclosure — a pre-pack is legally sound and ethically defensible.
Do creditors have to agree to a pre-pack?
No. Creditors are not asked to approve a pre-pack in advance. They are informed of the sale and the administrator's reasons for it after the event, through the SIP 16 disclosure. Creditors who feel the process was not conducted properly can challenge it, but a properly managed pre-pack with an independent valuation and appropriate marketing will withstand scrutiny.
Can I buy my own company back through a pre-pack?
Yes — a connected-party pre-pack (where the buyer is connected to the previous directors) is possible, but it is more heavily regulated than a third-party sale. Since 2021, connected-party pre-packs require the approval of an independent evaluator before proceeding. Business Guardian manages this process and advises on the requirements in full.
Will a pre-pack affect my personal credit rating?
A pre-pack administration affects the company's credit history, not the director's personal credit rating — unless the director has given personal guarantees that are called upon as part of the process. Directors are not automatically personally liable for company debts in a pre-pack, unless there is evidence of wrongful or fraudulent trading.
—work with us—
Your Business Deserves
Expert Protection.
Don’t wait until options run out. Early action almost always leads to a
better outcome — whether that means rescuing your business or closing
it correctly.